Property abroad? Beware of forced heirship rules
News article published on: 22nd October 2019
Whether it’s a holiday home, an investment property or a place you want to retire to, if you own a property abroad you could be subject to strict succession rules stipulating that your children must inherit at least a share of the property after you die, regardless of your wishes.
These forced heirship rules are commonplace in European countries including France, Spain and Italy as well as in Japan, Saudi Arabia a number of Caribbean islands. Unless you take steps to prevent it, your property will be subject to the law where it is located and attempts to leave the property to, for instance, your spouse from a second marriage, just one of your children or to a charity, may not succeed and will be open to dispute.
Jan Atkinson, partner and head of private client at London law firm, Osbornes Law explains, “Whilst in England and Wales the basic principle is that you are free to decide who inherits your estate, there are many countries where the law states that you must provide for your children. In France for example, forced heirship rules mean that 50-75% of your assets must pass to your children, depending on how many you have.”
Since 2015, the situation in EU countries has been easier to resolve thanks to the introduction of European Succession Regulation, known as Brussels IV. Provided you are a British national, it allows you to choose the law governing the succession of your EU assets on death which you can do by stating in your will that English law should apply to your entire estate. This should remain unchanged post-Brexit.
If your property is in a non-European country where forced heirship applies, then your options are more limited. The country may have its own arrangements and options which will assist in ensuring property passes outside that regime.
Jan says, “If you fail to make a will, your real estate (houses and flats) will be subject to the succession laws of the country where is it situated, and your assets will be distributed according to its succession rules. Even if you write a will but fail to add the necessary provisions to ensure your wishes relating to foreign property are carried out, you may find that children who expected to inherit at least a share of your property challenge your will. This is most common in cases where children have been deliberately disinherited or where the deceased wishes to leave a property to a spouse from a second marriage. Potentially this can leave loved ones in a position where they are forced into a costly legal dispute.”
Jan’s top tips to follow when you have property abroad are:
- If you are planning on buying a property abroad make sure you are familiar with the laws governing inheritance and succession before you make the purchase – it may impact on your decision.
- Check if there are any local purchasing mechanisms for keeping such property outside any forced heirship regime.
- If any of your property is outside England and Wales it is wise to instruct a lawyer in that country to advise you on making a local will that covers the property. Care must be taken to ensure that does not inadvertently revoke your English will.
- Consider whether you should include a declaration of succession in your English will to ensure English rules will be applied to your foreign property.
- Show a copy of the non-English will to your English lawyers so they can check the two wills neatly dovetail and nothing has been overlooked.